Fort Pierce Indus. Park Phases II, III & IV Owners Ass'n v. Shakespeare

• Decision Date: 22 June 2016
• Docket Number: No. 20140137,20140137
• Citation: 2016 UT 28,379 P.3d 1218
• Court: Utah Supreme Court
• Parties: Fort Pierce Industrial Park Phases II, III & IV Owners Association, Appellant and Cross–Appellee, v. Thomas A. Shakespeare; Gloria J. Shakespeare; Gloco, LC; Atlas Tower, LLC, Appellees and Cross–Appellants.

379 P.3d 1218

2016 UT 28

Fort Pierce Industrial Park Phases II, III & IV Owners Association, Appellant and Cross–Appellee,

v.Thomas A. Shakespeare; Gloria J. Shakespeare; Gloco, LC; Atlas Tower, LLC, Appellees and Cross–Appellants.

No. 20140137

Supreme Court of Utah.

Filed June 22, 2016

Linda M. Jones, Troy L. Booher, Clemens A. Landau, Salt Lake City, Robert D. Mitchell, St. George, for appellant.

David L. Elmont, M. Eric Olmstead, St. George, for appellees.

Justice Himonas authored the opinion of the Court, in which Chief Justice Durrant, Associate Chief Justice Lee, and Justice Durham joined. Justice John A. Pearce became a member of the Court on December 17, 2015, after oral argument in this matter, and accordingly did not participate.

On Direct Appeal

Justice Himonas, opinion of the Court:

INTRODUCTION

¶ 1 This case is about the authority of the Board of Trustees (Board) of the Fort Pierce Industrial Park Phases II, III & IV Owners Association (Association) to deny an application to construct a cell phone tower on a specific lot in the Fort Pierce Industrial Park. The lot in question is located along River Road, which is “the most aesthetically sensitive area of the” industrial park. In 2009, Gloria and Thomas Shakespeare; GLOCO, LC; and Atlas Tower, LLC (collectively, Shakespeares) applied for permission from the Board to construct a cell phone tower on that lot. Despite the denial of their application, the Shakespeares proceeded to construct the cell phone tower. The Association then brought suit against the Shakespeares in district court for breach of the CC&Rs.¹

¶ 2 Following a bench trial, the district court held that the Shakespeares breached the CC&Rs by constructing the cell phone tower without permission from the Board. However, the district court also applied a presumption that “restrictive covenants are not favored in the law and are strictly construed in favor of the free and unrestricted use of property” and held that the Board did not have the right to limit the number of cell phone towers in the industrial park. Additionally, the district court found that the Board could consider aesthetics and the two-business limit but held that the Board did not “reasonably consider” these factors in making its decision.

¶ 3 As explained below, we hold that the court erred in strictly construing the CC&Rs rather than applying neutral principles of contract construction. Thus, we reverse the district court's holding regarding the Board's authority to deny the Shakespeares' application and instead hold that the Board had sufficient authority under the CC&Rs to deny that application. We also affirm the district court's grant of summary judgment regarding the timeliness of the Board's denial, and we strike the attorney fees award and remand for a determination of attorney fees in light of this decision.

BACKGROUND

¶ 4 The Fort Pierce Industrial Park was created as “an attractive development option for companies seeking to start or expand businesses.” It is a “very nice industrial park” in Washington County, Utah, and is “intended ... to be a cut above the norm.” The Board has authority to “enforce and administer the [CC&Rs],” which bind owners and operators within the industrial park. The purpose of the CC&Rs is to “establish a general plan for the improvement and development of the [Fort Pierce Industrial Park] Property[,] to [e]nsure adherence thereto so as to avoid improper development and use of the Property [,] and to provide adequately for consistent quality of improvement and use.” Among other things, the CC&Rs “require that external equipment be shielded” and impose “maintenance requirements, prohibitions against hazards, and parking and signage requirements.”

¶ 5 Under the CC&Rs, property owners in the industrial park must apply to the Board for written approval “[b]efore commencing the construction or alteration of any buildings ... or any other structures or permanent improvements.” After the owner has submitted the required plans, the Board has “the right to refuse to approve any such plans and specifications.” In making its determination, the Board may consider the following factors: “the suitability of the proposed structure, the materials of which it is to be built, the site upon which it is proposed to be erected, the harmony thereof with the surroundings, and the effect of said building, or other planned structure, on the outlook from adjacent or neighboring property.” The Board is “guided by [the CC&Rs], the ordinances of the City of St. George, including the Uniform Building Code as adopted, and other applicable rules and regulations” and has “the power to enforce its decision.”

¶ 6 Both the St. George city ordinances and the CC&Rs emphasize aesthetic considerations at the planning stage. Chapter 22 of the city ordinances is titled “Wireless Telecommunication Facilities” and addresses “planning issues, particularly aesthetic concerns, brought on by the demand for wireless communication facilities.” ST. GEORGE, UTAH, CITY CODE § 10–22–1(A) (2016). The regulations in that chapter “are intended to minimize the visual impact of wireless communication facilities.” Id. § 10–22–1(B). They include a city policy “to encourage collocation of facilities wherever feasible,” with up to three providers permitted in a single tower; if collocation is not feasible, the burden is on the applicant to demonstrate infeasibility. Id. § 10–22–7(B). As to the CC&Rs, in addition to the considerations already listed, they restrict permitted uses of the property to “selected industrial, manufacturing and marketing enterprises that are compatible with the development” and to “aesthetically attractive and harmonious structures.” The CC&Rs seem to pay particular attention to River Road, indicating that “to provide for an overall aesthetic project, Lots that face River Road may be subject to additional specific landscaping standards.” The CC&Rs also limit the number of businesses per lot, requiring “specific written consent of the Board” for more than two simultaneous tenants or users or for more than two businesses to be conducted simultaneously on a single lot.

¶ 7 The events giving rise to this case transpired after the Board learned of “a problem with cell phone coverage” in the industrial park in early 2008 and was approached by a couple of cell phone service providers. Before the Shakespeares applied for permission to construct the cell phone tower at issue in this case, two other cell phone tower developers had sought permission to build cell phone towers in the Fort Pierce Industrial Park. At the beginning of 2008, Alltel Communications' (Alltel) cell phone tower proposal was approved by the Planning Commission of St. George,² but Alltel “abandoned the project for cost reasons” without submitting a plan to the Board for approval. A few months later, InSite Towers, LLC, (InSite) approached the Board and inquired about constructing a cell phone tower in the industrial park. InSite and the Board discussed possible locations for several months; InSite suggested a couple of locations along River Road, but the Board discouraged InSite from locating a cell phone tower there because of concerns about visibility, aesthetics, and the two-business limit and because that area “was just very sensitive.” The Board finally approved a non-River Road location on the west boundary of the industrial park where InSite's cell phone tower “would not be along the ridge line” and would be “kind of concealed.”

¶ 8 In 2009, the Shakespeares applied to construct a cell phone tower on their lot, which is located on River Road. The lot is comparatively small and already had two businesses on it. The Shakespeares first obtained approval from the city and then sought approval from the Board. The district court found that the Board denied the application because it wanted to limit the number of cell phone towers “to the minimum number necessary to meet the community needs” and for “other reasons ... including primarily the aesthetics and the two-business limit.” Despite the Board's denial, Gloria and Thomas Shakespeare and GLOCO, LC, permitted Atlas Towers (their lessee) to construct a cell phone tower on the lot, without notifying the Board. In early January 2010, the Board discovered that construction of a cell phone tower had begun on the Shakespeares' lot, and the Board filed a lawsuit against the Shakespeares. The Shakespeares counterclaimed, seeking injunctive relief, damages, and attorney fees.

¶ 9 The district court held that constructing the cell phone tower without Board approval constituted a breach of the CC&Rs. But because the district court found the Board's denial to be “unreasonable and arbitrary,” it held that “[t]he tower is approved and allowed to remain.” In finding the denial “unreasonable and arbitrary,” the district court presumed that restrictive covenants, such as the CC&Rs, are disfavored and should be “strictly construed in favor of the free and unrestricted use of property.” According to the district court, the Board breached the CC&Rs “by basing its denial of the Shakespeares' application on use limits not found in the [CC&Rs], and by otherwise unreasonably and arbitrarily denying the application.” Specifically, the district court indicated that “Fort Pierce does not have the right under the Restrictive Covenants to limit the number of cell towers within the industrial park.” The district court found that the Board acted in good faith and that other concerns factored into the decision, “including primarily the aesthetics and the two-business limit.” However, the district court found that the testimony “establishe[d] that the dominant factor in the decision was the preference of one site [InSite's] over the other [the Shakespeares'].” Because the district court, based on its strict construction of the CC&Rs, believed that the Board lacked the authority to limit the number of cell phone towers, and because it found that such a...